PUBLISHED IN THE GAZETTE OF INDIA, PART
II, SECTION 3(i), EXTRAORDINARY
Ministry of Finance
(Department of Company Affairs)
New Delhi, the
21st October ,
2003
G.S.R. 830 (E).- In
exercise of the powers conferred by clause (b) of sub-section (1) of section 642
of the Companies Act, 1956 (1 of 1956), the Central Government hereby makes the
following rules to carry out the purpose of clause (g) of sub-section (1) of
section 274 of the said Act, namely :-
1. Short title, commencement
and extent.-
(1) These rules may be called the Companies
(Disqualification of Directors under section 274(1)(g) of the Companies Act,
1956) Rules, 2003.
(2) These rules shall come into force from the date of their notification
in the Official Gazette.
(3) These rules shall apply to all public limited companies registered
under the Companies Act, 1956.
2.
Definitions -
In these rules, unless the context
otherwise requires, -
(a) "disqualifying company" is
the company in which the default has occurred on account of which a director
stands disqualified;
(b) "appointing company" is the
company in which an individual is seeking appointment as a director, including
re-appointment as director.
3.
Disqualifications under clause (g) of
sub-section (1) of section 274 of the
Companies Act, 1956.-
(a) Whenever a company fails to
file the annual accounts and annual returns, as described in sub-clause (A) of
clause (g) of sub-section (1) of section 274, persons who are directors on the
last due date for filing the annual accounts and the annual returns for any
continuous three financial years commencing on and after the first day of April,
1999, shall be disqualified.
(b) If a company has failed to repay
any deposit, irrespective of the enactment, rules or regulations under which the
deposits have been accepted by the companies, or interest thereon, or redeem its
debentures, or pay any dividend declared on the respective due dates, and if
such failure continues for one year, as described in sub-clause (B) of clause
(g) of sub-section (1) of section 274, then the directors of that company shall
stand disqualified immediately on expiry of that one year from the respective
due dates:
Provided that all the directors who have been
directors in the relevant year, from the due date to the expiry of one year
after the due date, will be disqualified:
Provided further that disqualification on account
of the reasons cited under this Rule
shall also apply to the reappointment as a
director.
Explanation.- For the purpose of this rule, it is
clarified that non-payment of dividend referred to in sub-clause (B) of clause
(g) of sub-section (1) of section 274 due to the reason of dividend not being
claimed or kept in separate bank account as required under section 205A of
Companies Act, 1956 or paid into Investors Education & Protection Fund as
required under section 205C of that Act shall not be deemed to be a failure to
make payment of dividend.
4. Duty of
Statutory Auditor to report on disqualification.-
(a)
It shall be the duty of statutory auditor of the appointing company as
well as disqualifying company, as required under section 227(3)(f) to report to
the members of the company whether any director is disqualified from being
appointed as director under clause (g) of sub-section (1) of section 274 and to
furnish a certificate each year as to whether on the basis of his examination of
the books and records of the company, any director of the company is
disqualified for appointment as a director or not.
(b) It shall be the duty of the
statutory auditors of the "disqualifying company" as required in section
227(3)(f) to report to the members of the company whether any director in the
company has been disqualified during the year from being re-appointed as
director, or being appointed as director in another company under clause (g), of
sub-section (1) of section 274.
5. Duty of company to intimate
disqualification.-
Whenever a company fails to file the
annual accounts and returns, or fails to repay any deposit, interest, dividend,
or fails to redeem its debentures, as described in clauses (A) and (B) of clause
(g) of sub-section (1) of section 274, the company shall immediately file a
return in duplicate in Form 'DD-B', prescribed under these rules for this
purpose, to the Registrar of Companies, furnishing therein the names and
addresses of all the Directors of the company during the relevant financial
years:
Provided that names of such directors who have been
exempted from application of Section 274(1)(g) by the Central Government, from
time to time, shall be excluded.
Provided further that no
unusual abbreviations or short forms shall be used in filling up the Form
'DD-B', which shall give such details as may be necessary to distinguish and
identify each director without any ambiguity.
6.
Failure to intimate disqualification shall render director as officer in
default.-
When a company fails to file the Form 'DD-B' as above within 30 days of the
failure that would attract disqualification under Section 274(1)(g), officers of
the company
listed in section 5 of the Companies Act,
1956 shall be officers in default.
7. (a) Upon receipt of the Form 'DD-B' in duplicate under Rule 5, the
Registrar of Companies shall immediately register the document and place one
copy of it in the document file for public inspection.
(b)
The Registrar of Companies shall forward the other copy to the Central
Government.
8.
Names of the disqualified directors on the
web-site etc.-
(a)
The Central
Government shall place on the web-site of the Department of Company Affairs the
names and addresses and such other details including names and details of the
companies concerned, as may be necessary, in respect of all the disqualified
directors.
(b)
The Central
Government may also publicize the names of disqualified directors in such manner
as it may consider appropriate.
(c)
The Central Government shall take such steps as may be required to update
its web-site to ensure that name of the person, in whose respect
disqualification period has expired after 5 years, is deleted from the
web-site.
9.
Duty of every director.-
Every director in a public company
registered under the Companies Act, 1956 shall file Form 'DD-A', prescribed under these Rules,
before he is appointed or re-appointed.
10. If any
question arises as to whether these rules are or are not applicable to a
particular company, such question shall be decided by the Central
Government.
11.
Punishment for contravention of the
rules.-
If a company or any other person
contravenes any provision of these rules for which no punishment is provided in
the Companies Act, 1956, the company and every officer of the company who is in
default or such other person shall be punishable with fine which may extend to
five thousand rupees and where the contravention is a continuing one, with a
further fine which may extend to five hundred rupees for every day after the
first, during which the contravention continues.
12. On the
commencement of these rules, all rules, orders or directions in force in
relation to any matter for which provision is made in these Rules shall stand
repealed, except as respects things done or omitted to be done before such
repeal.
[F. No.1/8/2002-CL.V]
Rajiv Mehrishi,
Joint Secretary
FORM 'DD-A'
Companies (Disqualification of Directors
under section 274(1)(g) of the Companies Act, 1956) Rules, 2003
Intimation by
Director
[Pursuant to Section
274(1)(g)]
Registration
No. of Company ______________
Nominal Capital
Rs._____________
Paid-up Capital
Rs. _____________
Name of
Company__________________________
Address of its
Registered Office___________________
To
The Board of
Directors
of
__________________________
I
_______________ son/daughter/wife of _______________ resident of
___________________ director/managing director/manager in the company hereby
give notice that I am/was a director in the following companies during the last
3 years:-
|
Name
of the Company 1...... 2...... |
Date
of Appointment |
Date
of Cessation |
I further
confirm that I have not incurred disqualification under section 274(1)(g) of the
Companies Act, 1956 in any of the above companies, in the previous financial
year, and that I, at present, stand free from any disqualification from being a
director.
or
I further
confirm that I have incurred disqualifications under section 274(1)(g) of the
Companies Act, 1956 in the following company(s) in the previous financial year,
and that I, at present stand disqualified from being a
director.
|
Name
of the Company 1.......
2......
|
Date
of Appointment |
Date
of Cessation |
Signature
(Full Name)
Dated this
_________ day of _________
FORM 'DD-B'
Report by a public
company
[Pursuant to Section 274(1)(g) read with
rule 5 of Companies (Disqualification of Directors under section 274(1)(g) of
the Companies Act, 1956) Rules, 2003]
Registration
No. of Company ______________
Nominal Capital
Rs._____________
Paid-up Capital
Rs. _____________
Name of
Company__________________________
Address of its
Registered Office____________________
To
The Registrar
of Companies,
It is hereby
reported under section 274(1)(g) of Companies Act, 1956, that M/s. ___________
have failed to (i) file the annual accounts and annual returns for the last
three financial years, or (ii) repay deposits or interest thereon on due date
being ___________ or redeem its debentures on due date being _________ or pay
dividend declared by the company since __________ or both. The period of one
year has expired on ___________.
The name and
address of directors at the relevant period are as under
:-
(a)
Director's name in full, without abbreviations
(b)
Director's name as per company's records
(abbreviations may be expanded and shown)
(c)
Address of the Director : -
(i)
Permanent
(ii)
Present
(d)
Positions held by the director in the last 5 years, prior to
disqualification:
Signature
Designation*
Dated this
_________ day of _________
*State whether
Director, Managing Director, Manager or Secretary